Germany Inflation

Germany: Inflation dips to lowest level in more than two years

April 29, 2013

In April, consumer prices fell 0.5% over the previous month, according to a preliminary flash estimate released by the Federal Statistics Office (Destatis) on 29 April. The reading contrasted the 0.5% increase recorded in the previous month and exceeded market expectations that had prices falling 0.2%.

As a result of the monthly drop, annual headline inflation declined from 1.4% in March to 1.2% in April, which represents the lowest level since August 2010. The print undershot market expectations, which had inflation unchanged at 1.4%. Consequently, annual average inflation inched down from 1.9% in March to 1.8% in April.

Meanwhile, annual HICP inflation (based on the harmonized index of consumer prices) fell from 1.8% March to 1.2% in April.

The Bundesbank expects inflation to average 1.5% in 2013, before inching up to 1.6% in 2014. FocusEconomics panellists expect inflation to average 1.8% in 2013, which is unchanged from the previous month's forecast. For 2014, panellists expect inflation to increase to 1.9%.

Author:Ricardo Aceves, Senior Economist

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